There’s a quiet war unfolding—not in trenches or skies, but in meeting rooms, boardrooms, and global summits. The weapons? Not tanks or tariffs, but technical standards. Who defines the rules that govern how your phone connects to the internet? How your food is labeled? How a digital currency operates across borders? Behind each of these decisions lies a subtle but potent form of geopolitical power. And in 2025, that power is being fiercely contested between East and West. Explore how the East West geopolitics divide is shaping global standards in technology, trade, and finance. Based on WDR 2025 insights, this blog reveals why setting the rules is now a matter of power and politics.
The World Development Report 2025 (WDR 2025) from the World Bank has spotlighted this rising trend: standard-setting is no longer a backroom technical exercise—it’s a frontline arena in global rivalry. As the world fractures into competing spheres of influence, the question isn’t just who trades with whom, but whose rules define the game.
From 5G protocols and data privacy norms to green energy benchmarks and AI ethics, the East West geopolitics race to dominate standards is reshaping everything from supply chains to sovereignty.
This blog explores how this global clash over standards is emerging as a defining feature of Cold War II:
- Why standards matter more than ever
- How the U.S., EU, and China are pushing competing systems
- What WDR 2025 reveals about the risks for developing countries
- Real-world examples of standard wars in action
- What it means for global trade, growth, and governance
And finally, we’ll explore a path forward—one that puts cooperation over coercion, with insights from global procurement expert Mattias Knutsson on building trust in divided times.
The Power of Standards: Silent but Supreme
Why are standards so critical?
Because they shape everything—how goods are produced, sold, regulated, and integrated into the global economy. They set the requirements for safety, interoperability, compliance, and trust. In short, they determine who participates and on whose terms.
The WDR 2025 makes a crucial point: standards are now strategic assets. They influence trade competitiveness, innovation leadership, and even national security.
Consider these examples:
- 5G mobile networks: Competing protocols from Huawei (China) vs. Ericsson and Nokia (EU) have split global telecom infrastructures.
- AI safety frameworks: The EU’s AI Act imposes strict transparency and bias controls. China’s AI rules center on social stability and surveillance integration.
- Green taxonomies: The EU’s green finance regulations exclude coal and nuclear; China’s includes both. This creates inconsistencies in ESG investment flows.
These divergences aren’t just theoretical—they shape trillions in trade, financing, and procurement every year.
East West Geopolitics: Two Approaches to Setting the Rules
The world is seeing two distinct models of standard-setting emerge, mirroring deeper philosophical and political divides.
The Western Model (U.S., EU, G7, OECD-aligned):
- Emphasizes open standards led by independent or multilateral bodies (ISO, IEC, ITU)
- Encourages stakeholder participation from academia, civil society, and industry
- Focuses on transparency, rights protections, and compatibility with rule-of-law norms
- Examples: GDPR (data privacy), Basel III (banking), CE mark (product safety)
The Eastern Model (China-led, with support from Russia, Iran, and BRICS+ members):
- Emphasizes state-driven standards led by national agencies or SOEs
- Often bundled with technology exports, especially in digital and energy sectors
- Prioritizes state control, sovereignty, and strategic autonomy
- Examples: China Standards 2035, BRI Digital Silk Road protocols, Yuan-based trade standards
World Bank data shows that by 2024, over 40% of developing countries had adopted or were considering adoption of China-aligned digital infrastructure standards, especially in Africa, Central Asia, and Southeast Asia.
The Race to Regulate: Where Standards Are Colliding
The WDR 2025 identifies five arenas where the standard-setting rivalry is most intense—and most consequential:
Digital Infrastructure and Cybersecurity
From 5G to facial recognition, countries are being asked to choose between Chinese-backed networks (Huawei, ZTE) and Western alternatives. This affects:
- Surveillance capabilities
- Data control
- Military and intelligence vulnerabilities
Artificial Intelligence
As AI powers everything from hiring to drones, standards about fairness, privacy, and ethical use vary drastically:
- The EU’s AI Act bans social scoring systems—China encourages them.
- U.S. standards are industry-led and innovation-focused, but lack uniform enforcement.
Green Energy and ESG
Climate rules are now a competitive tool. Nations adopting Chinese green tech (solar, EVs) face different emissions tracking requirements than those tied to EU or U.S. green bonds.
Digital Finance and CBDCs
China’s digital yuan, already used in cross-border pilots, comes with embedded traceability. Western digital currencies (FedNow, EU digital euro) emphasize privacy and anti-money laundering standards. These norms could determine future dominance in international payments.
Food Safety and Agriculture
Diverging biotech and pesticide standards mean that what’s legal in one bloc may be banned in another—hurting farmers in export-dependent economies.
The Cost of Divergence for the Global South
While standard-setting is a power game between superpowers, developing countries are paying the price of inconsistency and fragmentation.
The WDR 2025 warns of a new kind of inequality: standard exclusion.
- African exporters face rising compliance costs just to meet multiple sets of rules
- Small Pacific Island states can’t afford to implement both Western cyber norms and Chinese smart city systems
- Landlocked economies in Central Asia struggle to integrate cross-border logistics with conflicting transport protocols
World Bank estimates show that duplicative standards can reduce export revenues by 15–30% in low-income countries due to incompatibilities, rejections, and extra verification costs.
Moreover, aid and financing flows are increasingly tied to adherence to one standard system or another—creating soft coercion for alignment. Countries may lose critical infrastructure funding if they don’t “choose” the right standard partner.
Real-World Examples: Standards as Strategy
Kenya and Smart Cities
Kenya has welcomed Chinese investment in “Safe City” surveillance systems, part of the Belt and Road’s (BRI) digital arm. But critics warn these technologies don’t meet GDPR-style data protections. As a result, Kenya risks restrictions on digital data flows with the EU.
Brazil and Agriculture
Brazil’s soybean exports face differing pesticide residue standards in China vs. the EU. Compliance with both increases costs. Farmers are urging the government to negotiate unified bilateral standards—a task easier said than done.
Indonesia and EV Batteries
Indonesia is rich in nickel, vital for EV batteries. Western buyers demand ESG certifications aligned with OECD norms. China is more flexible but insists on using its own industrial classification. Indonesia is caught between economic opportunity and reputational risk.
What Can Be Done: World Bank Recommendations from WDR 2025
The WDR 2025 doesn’t simply diagnose the problem—it offers a vision for how to navigate standard divergence without fragmenting development.
Promote Global Dialogue Platforms
Encourage inclusive multi-stakeholder forums where both East and West can negotiate harmonized minimums—especially in health, climate, and AI.
Support Local Capacity Building
Many developing countries don’t lack the will to meet high standards—they lack the expertise, labs, and infrastructure. World Bank technical assistance can bridge this gap.
Incentivize Interoperability
Through smart procurement and financing, the Bank can encourage the development of dual-compatible standards (e.g., technology that works in both ecosystems).
Champion “Good Enough” Harmonization
Perfection is the enemy of progress. The Bank calls for “core standard baselines” that preserve human rights and economic access without enforcing ideological conformity.
Conclusion:
At its heart, the battle over standards is a battle over who gets to define the future—and whose vision the rest of the world must follow.
But if the world splits too deeply into competing rulebooks, the result won’t just be inconvenience. It will be lost growth, digital inequality, and systemic mistrust.
As Mattias Knutsson, a strategic leader in global procurement, observes:
“Standards should serve people, not politics. When rules become tools of rivalry, the cost isn’t just economic—it’s human. Procurement, trade, and development must stay anchored in shared values of trust, transparency, and accessibility.”
The WDR 2025 sounds the alarm—but also lights a path forward. If institutions like the World Bank can foster interoperability over ideological purity, we may yet preserve a global system that lifts all nations, not just the powerful.
In a time when rules are being rewritten, let’s not forget who they’re supposed to protect.
